Monday, March 14, 2011

ANADIGICS Inc (NASDAQ: ANAD) Q2 2011 Price Target

Recent price: 4.47$
P/E Ratio: 317.04
3 Months Target Price: 6.50$

Company Description
According to data provided by Reuters, ANADIGICS, Inc., incorporated in 1984, is a provider of semiconductor solutions in the broadband wireless and wireline communications markets. The Company’s products include power amplifiers (PAs), tuner integrated circuits, active splitters, line amplifiers and other components, which can be sold individually or packaged as integrated radio frequency (RF) and front end modules. The Company offers third generation (3G) products that use the wideband code-division multiple access (W-CDMA) and enhanced data rates for global system for mobile communication evolution (EDGE) standards and combinations of W-CDMA and EDGE platforms (WEDGE), beyond third generation (3.5G) products that use the high speed packet access (HSPA, inclusive of downlink and uplink) and evolution data optimized (EVDO) standards, fourth generation (4G) products for worldwide interoperability for microwave access (WiMAX) and long term evolution (LTE), wireless fidelity (WiFi) products that use the 802.11 a/b/g and 802.11 n (multiple input multiple output (MIMO)) standards, cable television (CATV) cable modem and set-top box products, CATV infrastructure products and fiber-to-the-premises (FTTP) products.

The Company classifies its revenues based upon the end application of the product, in which its integrated circuits are used. During the year ended December 31, 2009, wireless accounted for approximately 68% of its total net sales, while broadband accounted for approximately 32% of its total net sales. The Company’s wireless product line includes power amplifier modules for CDMA/EVDO, GSM/EDGE, WCDMA/HSPA, LTE and other wireless technologies for mobile handsets and data devices. Its broadband product line encompasses video and data telecommunications systems, primarily consisting of CATV, WiFi and WiMAX applications.

Confidence Margins
Strong resistance $8.20 (+49%)
Light resistance $6.85 (+53%)
Light support $3.58 (-20%)
Strong support $3.00 (-33%)

Anadigics Inc is a very difficult candidate to evaluate. It seems that in the short term, the company is a great short candidate. Profits have been elusive, but the CEO and the CFO have been selling shares over the past quarter. It is therefore recommended to way before taking a position into this company or selling it short if it makes sense for you. However, Anadigics will prove to be a good long position to take for the coming quarter.

Entry strategy
For the cautious investor:
Buy the stock for 4.00$ or less, there is still some downside left; it is therefore suggested to way before taking a long position in this stock.

For the risk-taking trader:
The July 2011 5$ out-of-the-money call option contract seems to be the right position to take, they can be currently acquired for about 50$ per contract. Acquire then when the stock reaches the light support or if it breaks the downtrend resistance.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 6.50$, or keep it until 8$ if you are more bullish in your own analysis. It is highly recommended to keep the position on check if it goes sour.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 6.50$. This should provide a satisfactory returnas the contracts gets deeper in the money.

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